Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent
company of Banner Bank and Islanders Bank, today reported net
income of $39.6 million, or $1.15 per diluted share, in the third
quarter of 2019, compared to $39.7 million, or $1.14 per diluted
share, in the preceding quarter and a 5% increase when compared to
$37.8 million, or $1.17 per diluted share, in the third quarter of
2018. Third quarter of 2019 results include $676,000 of
acquisition-related expenses, compared to $301,000 of
acquisition-related expenses in the preceding quarter and $1.0
million in the third quarter of 2018. In the first nine
months of 2019, net income increased 14% to $112.6 million, or
$3.23 per diluted share, compared to $99.0 million, or $3.05 per
diluted share, in the first nine months a year ago. The 2019
results include $3.1 million of acquisition-related expenses
compared to $1.0 million of acquisition-related expenses for the
2018 period.
“Our third quarter 2019 performance continues to
demonstrate the success of our super community bank model which is
based on responsive service that generates client loyalty and
attracts new client relationships," stated Mark J. Grescovich,
President and Chief Executive Officer. “We recently announced
the pending acquisition of AltaPacific Bancorp, the holding company
for AltaPacific Bank. This transaction will increase Banner’s
presence in California by adding attractive core deposits and
new commercial banking relationships within our existing geographic
footprint.”
At September 30, 2019, Banner Corporation had
$12.10 billion in assets, $8.74 billion in net loans and $9.73
billion in deposits. Banner operates 172 branch offices,
including branch offices located in eight of the top 20 largest
western Metropolitan Statistical Areas by population.
Third Quarter 2019
Highlights
- Revenues decreased 1% to $137.5 million, compared to $139.4
million in the preceding quarter and increased 6% compared to
$129.5 million in the third quarter a year ago.
- Net interest income, before the provision for loan losses, was
$116.6 million, compared to $116.7 million in the preceding quarter
and increased 7% from $109.1 million in the third quarter a year
ago.
- Net interest margin was 4.25%, compared to 4.38% in the
preceding quarter and 4.48% in the third quarter a year ago.
- Mortgage banking revenue increased to $6.6 million, compared to
$5.9 million in the preceding quarter and increased 14% compared to
$5.8 million in the third quarter a year ago.
- Return on average assets was 1.31% compared to 1.36% in the
preceding quarter and 1.43% in the third quarter a year ago.
- Net loans receivable increased to $8.74 billion at September
30, 2019, compared to $8.65 billion at June 30, 2019, and increased
13% when compared to $7.73 billion at September 30, 2018.
- Non-performing assets remained low at $18.6 million, or 0.15%
of total assets, at September 30, 2019, compared to $21.0 million,
or 0.18% of total assets three months earlier, and $16.7 million,
or 0.16% of total assets, at September 30, 2018.
- Provision for loan losses was $2.0 million, and the allowance
for loan losses was $97.8 million, or 1.11% of total loans
receivable, as of September 30, 2019.
- Core deposits increased 4% to $8.51 billion at September 30,
2019, compared to $8.22 billion at June 30, 2019 and increased 13%
compared to $7.51 billion a year ago. Core deposits
represented 87% of total deposits at September 30, 2019.
- Quarterly dividends to shareholders were $0.41 per share.
- Common shareholders’ equity per share increased 2% to $44.80 at
September 30, 2019, compared to $43.99 at the preceding quarter end
and an increase of 14% from $39.26 a year ago.
- Tangible common shareholders' equity per share* increased 2% to
$34.10 at September 30, 2019, compared to $33.36 at the preceding
quarter end and an increase of 9% from $31.20 a year ago.
- Repurchased 400,000 shares of common stock at an average cost
of $54.62 per share.
*Tangible common shareholders' equity per share
and the ratio of tangible common equity to tangible assets (both of
which exclude goodwill and other intangible assets, net), and
references to adjusted revenue (which excludes fair value
adjustments and net gain (loss) on the sale of securities from the
total of net interest income before provision for loan losses and
non-interest income) and the adjusted efficiency ratio (which
excludes acquisition-related expenses, amortization of core deposit
intangibles, real estate owned gain (loss) and state/municipal
taxes from non-interest expense divided by adjusted revenue)
represent non-GAAP (Generally Accepted Accounting Principles)
financial measures. Management has presented these non-GAAP
financial measures in this earnings release because it believes
that they provide useful and comparative information to assess
trends in Banner's core operations reflected in the current
quarter's results and facilitate the comparison of our performance
with the performance of our peers. Where applicable,
comparable earnings information using GAAP financial measures is
also presented. See also Non-GAAP Financial Measures
reconciliation tables on the last two pages of this press
release.
Certain reclassifications have been made to the
2018 Consolidated Financial Statements and/or schedules to conform
to the 2019 presentation. These reclassifications have
affected certain line items and ratios for the prior periods but
have not changed net income or shareholders’ equity for those
periods. The effect of these reclassifications is considered
immaterial.
Significant Recent Initiatives and
Events
On July 24, 2019, Banner and AltaPacific Bancorp
("AltaPacific"), the holding company for AltaPacific Bank, entered
into a definitive merger agreement pursuant to which Banner will
acquire AltaPacific in an all-stock transaction, subject to the
terms and conditions set forth therein. Under the merger
agreement, AltaPacific will merge with and into Banner, and
immediately thereafter AltaPacific Bank will merge with and into
Banner Bank. The merger agreement specifies AltaPacific
shareholders will receive 0.2712 shares of Banner common stock in
exchange for each share of AltaPacific common stock, subject to
potential adjustment as provided in the merger agreement. Based on
the closing price of $54.19 per share of Banner common stock on
July 23, 2019, the merger consideration would have an aggregate
value of approximately $87.4 million. The transaction is
expected to close in the fourth quarter of 2019, subject to
customary closing conditions.
AltaPacific Bank is an independent business bank
headquartered in Santa Rosa, California and has additional banking
offices in Glendora, Ontario, Riverside, San Bernardino and
Temecula, California. The bank is focused on meeting the
specialized needs of small to medium-sized businesses and
professionals throughout California. At September 30, 2019,
AltaPacific Bank had assets of $420 million, a loan portfolio of
$334 million, and a deposit base of $297 million. Banner
expects the transaction to be immediately accretive to earnings per
share, excluding one-time transaction expenses. The combined
company will have approximately $12.5 billion in assets.
Income Statement Review
Banner's net interest margin was 4.25% for the
third quarter of 2019, a 13 basis-point decrease compared to 4.38%
in the preceding quarter and a 23 basis-point decrease compared to
4.48% in the third quarter a year ago. The decrease in net
interest margin during the quarter reflects lower yields on average
interest-earning assets largely as a result of two 25 basis point
decreases in the targeted Fed Funds Rate in the third quarter
coupled with a longer term decline in the 10 year treasury
yield. Acquisition accounting adjustments added six basis
points to the net interest margin in the current quarter compared
to seven basis points in the preceding quarter and 12 basis points
in the third quarter a year ago. The total purchase discount
for acquired loans was $21.3 million at September 30, 2019,
compared to $22.6 million at June 30, 2019, and $15.4 million at
September 30, 2018. In the first nine months of the year,
Banner’s net interest margin was 4.33% compared to 4.41% in the
first nine months of 2018.
Average interest-earning asset yields decreased
12 basis points to 4.79% compared to 4.91% for the preceding
quarter and decreased four basis points compared to 4.83% in the
third quarter a year ago. Average loan yields decreased 13
basis points to 5.20% compared to 5.33% in the preceding quarter
and decreased 11 basis points compared to 5.31% in the third
quarter a year ago. Loan discount accretion added seven basis
points to loan yields in the third quarter of 2019, compared to
nine basis points in the preceding quarter, and 15 basis points in
the third quarter a year ago. Deposit costs were 0.42% in the
third quarter of 2019, a three basis-point increase compared to the
preceding quarter and a 17 basis-point increase compared to the
third quarter a year ago. The total cost of funds was 0.57%
during the third quarter of 2019, a one basis-point increase
compared to the preceding quarter and a 20 basis-point increase
compared to the third quarter a year ago.
Banner recorded a $2.0 million provision for
loan losses in the current quarter, the same as in the prior
quarter and the year ago quarter. The provision is primarily
a result of new loan originations, the renewal of acquired loans
out of the discounted acquired loan portfolio and net
charge-offs.
Total non-interest income was $20.9 million in
the third quarter of 2019, compared to $22.7 million in the second
quarter of 2019 and $20.4 million in the third quarter a year
ago. Deposit fees and other service charges were $10.3
million in the third quarter of 2019, compared to $14.0 million in
the preceding quarter and $12.3 million in the third quarter a year
ago. The decrease in deposit fees and other service charges
is primarily a result of Banner becoming subject to the Durbin
Amendment on July 1, 2019, which reduced the amount of interchange
fees Banner can charge for certain debit card transactions.
Mortgage banking revenues, including gains on one- to four-family
and multifamily loan sales and loan servicing fees, increased to
$6.6 million in the third quarter, compared to $5.9 million in the
preceding quarter and $5.8 million in the third quarter of
2018. The higher mortgage banking revenue reflected an
increase in residential and multifamily mortgage held-for-sale loan
production. The increase in residential held-for-sale loan
production was primarily due to increased refinance activity.
Home purchase activity accounted for 56% of one- to four-family
mortgage loan originations in the third quarter of 2019, compared
to 77% in the prior quarter and 82% in the third quarter of
2018. In the first nine months of 2019, total non-interest
income was $61.7 million, compared to $63.0 million in the first
nine months of 2018.
Banner’s third quarter 2019 results included a
$69,000 net loss for fair value adjustments as a result of changes
in the valuation of financial instruments carried at fair value,
principally comprised of certain investment securities held for
trading and a $2,000 net loss on the sale of securities. In
the preceding quarter, results included an $114,000 net loss for
fair value adjustments and a $28,000 net loss on the sale of
securities. In the third quarter a year ago, results included
a $45,000 net gain for fair value adjustments.
Total revenue was $137.5 million for the third
quarter of 2019, compared to $139.4 million in the preceding
quarter and increased 6% compared to $129.5 million in the third
quarter a year ago. Year-to-date, total revenue increased 9%
to $411.1 million compared to $376.5 million for the same period
one year earlier. Adjusted revenue* (the total of net
interest income before provision for loan losses and non-interest
income revenue excluding the net gain and loss on the sale of
securities and the net change in valuation of financial
instruments) was $137.6 million in the third quarter of 2019,
compared to $139.5 million in the preceding quarter and $129.4
million in the third quarter of 2018. In the first nine
months of the year, adjusted revenue* was $411.3 million, compared
to $372.9 million in the first nine months of 2018.
Banner’s total non-interest expense was $87.3
million in the third quarter of 2019, compared to $86.7 million in
the preceding quarter and $81.6 million in the third quarter of
2018. Acquisition-related expenses were $676,000 for the
third quarter of 2019, compared to $301,000 for the preceding
quarter, and $1.0 million in the third quarter of 2018. Other
non-interest expense items of significance for the third quarter of
2019 include a credit of $2.7 million for previously paid deposit
insurance premiums which resulted in a net deposit insurance
benefit of $1.6 million for the quarter, which came as a result of
the FDIC exceeding its stated Deposit Insurance Fund Reserve
Ratio. This net deposit insurance benefit compares to a
deposit insurance expense of $1.4 million in the preceding quarter
and a deposit insurance expense of $991,000 in the third quarter of
2018. The current quarter also includes a $1.6 million
adjustment to salary and employee benefits expense as a result of
Banner decreasing the discount rate used to calculate its liability
associated with deferred compensation plans. Year-to-date,
total non-interest expense was $264.0 million, compared to $246.0
million in the same period a year earlier. Banner’s
efficiency ratio was 63.50% for the current quarter, compared to
62.22% in the preceding quarter and 63.04% in the year ago
quarter. Banner’s adjusted efficiency ratio* was 60.71% for
the current quarter, compared to 59.56% in the preceding quarter
and 60.21% in the year ago quarter.
For the third quarter of 2019, Banner recorded
$8.6 million in state and federal income tax expense for an
effective tax rate of 17.9%, reflecting a refund of state income
taxes totaling $1.2 million as well as adjustments related to
filing its federal and state income tax returns and the benefits
from tax exempt income sources. Banner’s normal, expected
statutory income tax rate is 23.7%, representing a blend of the
statutory federal income tax rate of 21.0% and apportioned effects
of the state income tax rates.
Balance Sheet Review
Total assets increased to $12.10 billion at
September 30, 2019, compared to $11.85 billion at June 30, 2019,
and $10.51 billion at September 30, 2018. The total of
securities and interest-bearing deposits held at other banks was
$1.87 billion at both September 30, 2019 and June 30, 2019. The
total of securities and interest-bearing deposits held at other
banks was $1.76 billion at September 30, 2018. The average
effective duration of Banner's securities portfolio was
approximately 3.1 years at September 30, 2019, compared to 4.2
years at September 30, 2018.
Net loans receivable increased to $8.74 billion
at September 30, 2019, compared to $8.65 billion at June 30, 2019,
and increased 13% when compared to $7.73 billion at September 30,
2018. The year-over-year increase in net loans included
$631.7 million of portfolio loans acquired in the Skagit
acquisition during the fourth quarter of 2018. Commercial
real estate and multifamily real estate loans were $4.01 billion at
September 30, 2019, compared to $3.95 billion at June 30, 2019, and
increased 14% compared to $3.52 billion a year ago.
Commercial business loans increased modestly to $1.62 billion at
September 30, 2019, compared to $1.60 billion at June 30, 2019, and
increased 19% compared to $1.36 billion a year ago.
Agricultural business loans increased by 3% to $390.5 million at
September 30, 2019, compared to $380.8 million three months earlier
and increased by 9% compared to $360.0 million a year ago.
Total construction, land and land development loans were $1.08
billion at September 30, 2019, unchanged from June 30, 2019, and a
6% increase compared to $1.02 billion a year earlier.
Consumer loans decreased slightly to $779.6 million at September
30, 2019, compared to $790.0 million at June 30, 2019, and
increased 10% compared to $710.5 million a year ago. One- to
four-family loans increased modestly to $947.5 million at September
30, 2019, compared to $944.6 million at June 30, 2019, and
increased 12% compared to $849.9 million a year ago.
Loans held for sale increased substantially to
$244.9 million at September 30, 2019, compared to $170.7 million at
June 30, 2019, and $72.9 million at September 30, 2018. The
volume of one- to four- family residential mortgage loans sold was
$204.6 million in the current quarter, compared to $139.0 million
in the preceding quarter and $134.1 million in the third quarter a
year ago. During the third quarter of 2019, Banner sold $79.4
million in multifamily loans. Banner did not sell any
multifamily loans in the preceding quarter and sold $94.0 million
in the third quarter a year ago.
Total deposits increased 5% to $9.73 billion at
September 30, 2019, compared to $9.29 billion at June 30, 2019, and
increased 12% when compared to $8.69 billion a year ago.
Non-interest-bearing account balances increased 6% to $3.89 billion
at September 30, 2019, compared to $3.67 billion at June
30, 2019, and increased 12% compared to $3.47 billion a year
ago. Core deposits (non-interest-bearing and interest-bearing
transaction and savings accounts) increased 4% from the prior
quarter and increased 13% compared to a year ago. Core
deposits represented 87% of total deposits at September 30, 2019,
compared to 88% of total deposits at June 30, 2019, and 86% of
total deposits a year earlier. Certificates of deposit
increased 14% to $1.22 billion at September 30, 2019, compared to
$1.07 billion at June 30, 2019, and increased 3% compared to $1.18
billion a year earlier. The increase in certificates of
deposit primarily reflects the increase in brokered deposits to
$299.5 million at September 30, 2019, compared to $138.4 million at
June 30, 2019 and were $352.2 million a year ago. The
increase in brokered deposits reflects the decision to fund a
smaller portion of the balance sheet with FHLB borrowings.
FHLB borrowings were reduced to $382.0 million at September 30,
2019 compared to $606.0 million at June 30, 2019 and were $221.2
million a year earlier.
At September 30, 2019, total common
shareholders' equity was $1.53 billion, or 12.65% of assets,
compared to $1.52 billion or 12.84% of assets at June 30, 2019, and
$1.27 billion or 12.10% of assets a year ago. At September
30, 2019, tangible common shareholders' equity*, which excludes
goodwill and other intangible assets, net, was $1.17 billion, or
9.93% of tangible assets*, compared to $1.15 billion, or 10.05% of
tangible assets, at June 30, 2019, and $1.01 billion, or 9.86% of
tangible assets, a year ago. Banner's tangible book value per
share* increased to $34.10 at September 30, 2019, compared to
$31.20 per share a year ago.
Banner repurchased 400,000 shares of its common
stock in the third quarter of 2019 at an average cost of $54.62 per
share. In the second quarter of 2019, Banner repurchased
600,000 shares of its common stock at an average cost of $53.46 per
share. Banner and its subsidiary banks continue to maintain
capital levels in excess of the requirements to be categorized as
“well-capitalized” under the Basel III and Dodd Frank Act
regulatory standards. At September 30, 2019, Banner's common
equity Tier 1 capital ratio was 10.86%, its Tier 1 leverage capital
to average assets ratio was 10.70%, and its total capital to
risk-weighted assets ratio was 13.20%.
Credit Quality
The allowance for loan losses was $97.8 million
at September 30, 2019, or 1.11% of total loans receivable
outstanding and 536% of non-performing loans compared to $98.3
million at June 30, 2019, or 1.12% of total loans receivable
outstanding and 534% of non-performing loans, and $95.3 million at
September 30, 2018, or 1.22% of total loans receivable outstanding
and 603% of non-performing loans. Net loan charge-offs
totaled $2.5 million in the third quarter, compared to net loan
charge-offs of $1.1 million in the preceding quarter and net loan
charge-offs of $612,000 in the third quarter a year ago.
Primarily as a result of the origination of new loans, the renewal
of acquired loans out of the discounted acquired loan portfolio and
net charge-offs, Banner recorded a $2.0 million provision for loan
losses in the current quarter, which was the same amount as
recorded in the prior quarter and in the year ago quarter.
Non-performing loans were $18.3 million at September 30, 2019,
compared to $18.4 million at June 30, 2019, and $15.8 million a
year ago. Real estate owned and other repossessed assets were
$343,000 at September 30, 2019, compared to $2.6 million at June
30, 2019, and $937,000 a year ago.
In accordance with acquisition accounting, loans
acquired from acquisitions were recorded at their estimated fair
value, which resulted in a net discount to the loans’ contractual
amounts, a portion of which reflects a discount for possible credit
losses. Credit discounts are included in the determination of
fair value, and as a result, no allowance for loan losses is
recorded for acquired loans at the acquisition date. At
September 30, 2019, the total purchase discount for acquired loans
was $21.3 million.
Banner's total non-performing assets were $18.6
million, or 0.15% of total assets, at September 30, 2019, compared
to $21.0 million, or 0.18% of total assets, at June 30, 2019, and
$16.7 million, or 0.16% of total assets, a year ago. In
addition to non-performing assets, there were $12.6 million of
purchased credit-impaired loans at September 30, 2019, compared to
$12.9 million at both June 30, 2019 and September 30, 2018.
Conference Call
Banner will host a conference call on Thursday,
October 24, 2019, at 8:00 a.m. PDT, to discuss its third quarter
results. To listen to the call on-line, go to
www.bannerbank.com. Investment professionals are invited to
dial (866) 235-9915 to participate in the call. A replay will
be available for one week at (877) 344-7529 using access code
10135112, or at www.bannerbank.com.
About the Company
Banner Corporation is a $12.10 billion bank
holding company operating two commercial banks in four Western
states through a network of branches offering a full range of
deposit services and business, commercial real estate,
construction, residential, agricultural and consumer loans.
Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”), in press releases or other public
stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases
"may," “believe,” “will,” “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimate,” “project,” “plans,”
"potential," or similar expressions are intended to identify
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. You are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date such statements are made and based
only on information then actually known to Banner. Banner
does not undertake and specifically disclaims any obligation to
revise any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date
of such statements. These statements may relate to future
financial performance, strategic plans or objectives, revenues or
earnings projections, or other financial information. By
their nature, these statements are subject to numerous
uncertainties that could cause actual results to differ materially
from those anticipated in the statements and could negatively
affect Banner's operating and stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1)
expected revenues, cost savings, synergies and other benefits from
the proposed merger of Banner and AltaPacific might not be
realized within the expected time frames or at all and costs or
difficulties relating to integration matters, including but not
limited to customer and employee retention, might be greater than
expected; (2) the requisite regulatory approvals for the proposed
merger of Banner and AltaPacific may be delayed or may not be
obtained (or may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of
the proposed merger); (3) the requisite approval of AltaPacific
shareholders may be delayed or may not be obtained, the other
closing conditions to the merger may be delayed or may not be
obtained, or the merger agreement may be terminated; (4) business
disruption may occur following or in connection with the proposed
merger of Banner and AltaPacific; (5) Banner’s or AltaPacific’s
businesses may experience disruptions due to transaction-related
uncertainty or other factors making it more difficult to maintain
relationships with employees, customers, other business partners or
governmental entities; (6) the possibility that the proposed merger
is more expensive to complete than anticipated, including as a
result of unexpected factors or events; diversion of managements’
attention from ongoing business operations and opportunities as a
result of the proposed merger or otherwise; (7) the credit risks of
lending activities, including changes in the level and direction of
loan delinquencies and write-offs and changes in estimates of the
adequacy of the allowance for loan losses, which could necessitate
additional provisions for loan losses, resulting both from loans
originated and loans acquired from other financial institutions;
(8) results of examinations by regulatory authorities, including
the possibility that any such regulatory authority may, among other
things, require increases in the allowance for loan losses or
writing down of assets or impose restrictions or penalties with
respect to Banner's activities; (9) competitive pressures among
depository institutions; (10) interest rate movements and their
impact on customer behavior and net interest margin; (11) the
impact of repricing and competitors' pricing initiatives on loan
and deposit products; (12) fluctuations in real estate values; (13)
the ability to adapt successfully to technological changes to meet
customers' needs and developments in the market place; (14) the
ability to access cost-effective funding; (15) changes in financial
markets; (16) changes in economic conditions in general and in
Washington, Idaho, Oregon and California in particular; (17) the
costs, effects and outcomes of litigation; (18) legislation or
regulatory changes, including but not limited to the impact of the
Dodd-Frank Act and regulations adopted thereunder, changes in
regulatory capital requirements pursuant to the implementation of
the Basel III capital standards, other governmental initiatives
affecting the financial services industry and changes in federal
and/or state tax laws or interpretations thereof by taxing
authorities; (19) changes in accounting principles, policies or
guidelines; (20) future acquisitions by Banner of other depository
institutions or lines of business; (21) future goodwill impairment
due to changes in Banner\'s business, changes in market conditions,
or other factors; and (22) other economic, competitive,
governmental, regulatory, and technological factors affecting our
operations, pricing, products and services; and other risks
detailed from time to time in our filings with the Securities and
Exchange Commission including our Quarterly Reports on Form 10-Q
and our Annual Reports on Form 10-K.
| RESULTS OF
OPERATIONS |
|
Quarters Ended |
|
Nine Months Ended |
| (in thousands except shares and
per share data) |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
| |
|
|
|
|
|
|
|
|
|
|
| INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
Loans receivable |
|
$ |
118,096 |
|
|
$ |
117,007 |
|
|
$ |
104,868 |
|
|
$ |
350,558 |
|
|
$ |
298,743 |
|
|
Mortgage-backed securities |
|
9,415 |
|
|
9,794 |
|
|
8,915 |
|
|
29,716 |
|
|
25,145 |
|
|
Securities and cash equivalents |
|
3,925 |
|
|
4,037 |
|
|
3,865 |
|
|
11,996 |
|
|
11,003 |
|
| |
|
131,436 |
|
|
130,838 |
|
|
117,648 |
|
|
392,270 |
|
|
334,891 |
|
| INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
10,014 |
|
|
9,023 |
|
|
5,517 |
|
|
27,680 |
|
|
13,139 |
|
|
Federal Home Loan Bank advances |
|
3,107 |
|
|
3,370 |
|
|
1,388 |
|
|
9,953 |
|
|
3,564 |
|
|
Other borrowings |
|
82 |
|
|
67 |
|
|
60 |
|
|
209 |
|
|
179 |
|
|
Junior subordinated debentures |
|
1,612 |
|
|
1,683 |
|
|
1,605 |
|
|
5,008 |
|
|
4,495 |
|
| |
|
14,815 |
|
|
14,143 |
|
|
8,570 |
|
|
42,850 |
|
|
21,377 |
|
|
Net interest income before provision for loan losses |
|
116,621 |
|
|
116,695 |
|
|
109,078 |
|
|
349,420 |
|
|
313,514 |
|
| PROVISION FOR LOAN
LOSSES |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
6,000 |
|
|
6,000 |
|
|
Net interest income |
|
114,621 |
|
|
114,695 |
|
|
107,078 |
|
|
343,420 |
|
|
307,514 |
|
| NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
Deposit fees and other service charges |
|
10,331 |
|
|
14,046 |
|
|
12,255 |
|
|
36,995 |
|
|
35,535 |
|
|
Mortgage banking operations |
|
6,616 |
|
|
5,936 |
|
|
5,816 |
|
|
15,967 |
|
|
15,324 |
|
|
Bank-owned life insurance |
|
1,076 |
|
|
1,123 |
|
|
1,726 |
|
|
3,475 |
|
|
3,511 |
|
|
Miscellaneous |
|
2,914 |
|
|
1,713 |
|
|
569 |
|
|
5,431 |
|
|
4,995 |
|
| |
|
20,937 |
|
|
22,818 |
|
|
20,366 |
|
|
61,868 |
|
|
59,365 |
|
|
Net (loss) gain on sale of securities |
|
(2 |
) |
|
(28 |
) |
|
— |
|
|
(29 |
) |
|
48 |
|
|
Net change in valuation of financial instruments carried at fair
value |
|
(69 |
) |
|
(114 |
) |
|
45 |
|
|
(172 |
) |
|
3,577 |
|
|
Total non-interest income |
|
20,866 |
|
|
22,676 |
|
|
20,411 |
|
|
61,667 |
|
|
62,990 |
|
| NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
Salary and employee benefits |
|
59,090 |
|
|
55,629 |
|
|
48,930 |
|
|
169,359 |
|
|
150,491 |
|
|
Less capitalized loan origination costs |
|
(7,889 |
) |
|
(7,399 |
) |
|
(4,318 |
) |
|
(20,137 |
) |
|
(13,062 |
) |
|
Occupancy and equipment |
|
12,566 |
|
|
12,681 |
|
|
12,385 |
|
|
39,013 |
|
|
35,725 |
|
|
Information / computer data services |
|
5,657 |
|
|
5,273 |
|
|
4,766 |
|
|
16,256 |
|
|
13,711 |
|
|
Payment and card processing services |
|
4,330 |
|
|
4,041 |
|
|
3,748 |
|
|
12,355 |
|
|
11,179 |
|
|
Professional and legal expenses |
|
2,704 |
|
|
2,336 |
|
|
3,010 |
|
|
7,474 |
|
|
11,276 |
|
|
Advertising and marketing |
|
2,221 |
|
|
2,065 |
|
|
1,786 |
|
|
5,815 |
|
|
5,758 |
|
|
Deposit insurance (benefit) expense |
|
(1,604 |
) |
|
1,418 |
|
|
991 |
|
|
1,232 |
|
|
3,353 |
|
|
State/municipal business and use taxes |
|
1,011 |
|
|
1,007 |
|
|
902 |
|
|
2,963 |
|
|
2,430 |
|
|
Real estate operations |
|
126 |
|
|
260 |
|
|
433 |
|
|
263 |
|
|
553 |
|
|
Amortization of core deposit intangibles |
|
1,985 |
|
|
2,053 |
|
|
1,348 |
|
|
6,090 |
|
|
4,112 |
|
|
Miscellaneous |
|
6,435 |
|
|
7,051 |
|
|
6,646 |
|
|
20,230 |
|
|
19,444 |
|
|
|
|
86,632 |
|
|
86,415 |
|
|
80,627 |
|
|
260,913 |
|
|
244,970 |
|
|
Acquisition-related expenses |
|
676 |
|
|
301 |
|
|
1,005 |
|
|
3,125 |
|
|
1,005 |
|
|
Total non-interest expense |
|
87,308 |
|
|
86,716 |
|
|
81,632 |
|
|
264,038 |
|
|
245,975 |
|
|
Income before provision for income taxes |
|
48,179 |
|
|
50,655 |
|
|
45,857 |
|
|
141,049 |
|
|
124,529 |
|
| PROVISION
FOR INCOME TAXES |
|
8,602 |
|
|
10,955 |
|
|
8,084 |
|
|
28,426 |
|
|
25,542 |
|
| NET
INCOME |
|
$ |
39,577 |
|
|
$ |
39,700 |
|
|
$ |
37,773 |
|
|
$ |
112,623 |
|
|
$ |
98,987 |
|
| Earnings per share available
to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.15 |
|
|
$ |
1.14 |
|
|
$ |
1.17 |
|
|
$ |
3.24 |
|
|
$ |
3.06 |
|
|
Diluted |
|
$ |
1.15 |
|
|
$ |
1.14 |
|
|
$ |
1.17 |
|
|
$ |
3.23 |
|
|
$ |
3.05 |
|
| Cumulative dividends declared
per common share |
|
$ |
0.41 |
|
|
$ |
0.41 |
|
|
$ |
0.38 |
|
|
$ |
1.23 |
|
|
$ |
1.58 |
|
| Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
34,407,462 |
|
|
34,831,047 |
|
|
32,256,789 |
|
|
34,760,607 |
|
|
32,300,688 |
|
|
Diluted |
|
34,497,994 |
|
|
34,882,359 |
|
|
32,376,623 |
|
|
34,850,006 |
|
|
32,406,414 |
|
| Decrease in common shares
outstanding |
|
(400,286 |
) |
|
(579,103 |
) |
|
(2,939 |
) |
|
(1,009,415 |
) |
|
(323,728 |
) |
|
FINANCIAL CONDITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
| (in thousands except shares and
per share data) |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
250,671 |
|
|
$ |
187,043 |
|
|
$ |
231,029 |
|
|
$ |
184,417 |
|
|
34.0 |
% |
|
35.9 |
% |
| Interest-bearing deposits |
|
73,785 |
|
|
59,753 |
|
|
41,167 |
|
|
64,244 |
|
|
23.5 |
% |
|
14.9 |
% |
|
Total cash and cash equivalents |
|
324,456 |
|
|
246,796 |
|
|
272,196 |
|
|
248,661 |
|
|
31.5 |
% |
|
30.5 |
% |
| Securities - trading |
|
25,672 |
|
|
25,741 |
|
|
25,896 |
|
|
25,764 |
|
|
(0.3 |
)% |
|
(0.4 |
)% |
| Securities - available for
sale |
|
1,539,908 |
|
|
1,561,009 |
|
|
1,636,223 |
|
|
1,412,273 |
|
|
(1.4 |
)% |
|
9.0 |
% |
| Securities - held to
maturity |
|
230,056 |
|
|
203,222 |
|
|
234,220 |
|
|
258,699 |
|
|
13.2 |
% |
|
(11.1 |
)% |
|
Total securities |
|
1,795,636 |
|
|
1,789,972 |
|
|
1,896,339 |
|
|
1,696,736 |
|
|
0.3 |
% |
|
5.8 |
% |
| Federal Home Loan Bank
stock |
|
25,623 |
|
|
34,583 |
|
|
31,955 |
|
|
19,196 |
|
|
(25.9 |
)% |
|
33.5 |
% |
| Loans held for sale |
|
244,889 |
|
|
170,744 |
|
|
171,031 |
|
|
72,850 |
|
|
43.4 |
% |
|
236.2 |
% |
| Loans receivable |
|
8,835,368 |
|
|
8,746,550 |
|
|
8,684,595 |
|
|
7,822,519 |
|
|
1.0 |
% |
|
12.9 |
% |
| Allowance for loan losses |
|
(97,801 |
) |
|
(98,254 |
) |
|
(96,485 |
) |
|
(95,263 |
) |
|
(0.5 |
)% |
|
2.7 |
% |
|
Net loans receivable |
|
8,737,567 |
|
|
8,648,296 |
|
|
8,588,110 |
|
|
7,727,256 |
|
|
1.0 |
% |
|
13.1 |
% |
| Accrued interest
receivable |
|
40,033 |
|
|
40,238 |
|
|
38,593 |
|
|
37,676 |
|
|
(0.5 |
)% |
|
6.3 |
% |
| Real estate owned held for
sale, net |
|
228 |
|
|
2,513 |
|
|
2,611 |
|
|
364 |
|
|
(90.9 |
)% |
|
(37.4 |
)% |
| Property and equipment,
net |
|
171,279 |
|
|
171,233 |
|
|
171,809 |
|
|
151,212 |
|
|
— |
% |
|
13.3 |
% |
| Goodwill |
|
339,154 |
|
|
339,154 |
|
|
339,154 |
|
|
242,659 |
|
|
— |
% |
|
39.8 |
% |
| Other intangibles, net |
|
26,610 |
|
|
28,595 |
|
|
32,924 |
|
|
18,499 |
|
|
(6.9 |
)% |
|
43.8 |
% |
| Bank-owned life insurance |
|
179,076 |
|
|
178,922 |
|
|
177,467 |
|
|
163,265 |
|
|
0.1 |
% |
|
9.7 |
% |
| Other assets |
|
213,291 |
|
|
196,328 |
|
|
149,128 |
|
|
135,929 |
|
|
8.6 |
% |
|
56.9 |
% |
|
Total assets |
|
$ |
12,097,842 |
|
|
$ |
11,847,374 |
|
|
$ |
11,871,317 |
|
|
$ |
10,514,303 |
|
|
2.1 |
% |
|
15.1 |
% |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,885,210 |
|
|
$ |
3,671,995 |
|
|
$ |
3,657,817 |
|
|
$ |
3,469,294 |
|
|
5.8 |
% |
|
12.0 |
% |
|
Interest-bearing transaction and savings accounts |
|
4,624,970 |
|
|
4,546,202 |
|
|
4,498,966 |
|
|
4,035,856 |
|
|
1.7 |
% |
|
14.6 |
% |
|
Interest-bearing certificates |
|
1,218,591 |
|
|
1,070,770 |
|
|
1,320,265 |
|
|
1,180,674 |
|
|
13.8 |
% |
|
3.2 |
% |
|
Total deposits |
|
9,728,771 |
|
|
9,288,967 |
|
|
9,477,048 |
|
|
8,685,824 |
|
|
4.7 |
% |
|
12.0 |
% |
| Advances from Federal Home
Loan Bank |
|
382,000 |
|
|
606,000 |
|
|
540,189 |
|
|
221,184 |
|
|
(37.0 |
)% |
|
72.7 |
% |
| Customer repurchase agreements
and other borrowings |
|
120,014 |
|
|
118,370 |
|
|
118,995 |
|
|
98,979 |
|
|
1.4 |
% |
|
21.3 |
% |
| Junior subordinated debentures
at fair value |
|
113,417 |
|
|
113,621 |
|
|
114,091 |
|
|
113,110 |
|
|
(0.2 |
)% |
|
0.3 |
% |
| Accrued expenses and other
liabilities |
|
181,351 |
|
|
159,131 |
|
|
102,061 |
|
|
82,530 |
|
|
14.0 |
% |
|
119.7 |
% |
| Deferred compensation |
|
41,354 |
|
|
40,230 |
|
|
40,338 |
|
|
40,478 |
|
|
2.8 |
% |
|
2.2 |
% |
|
Total liabilities |
|
10,566,907 |
|
|
10,326,319 |
|
|
10,392,722 |
|
|
9,242,105 |
|
|
2.3 |
% |
|
14.3 |
% |
| SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
1,286,711 |
|
|
1,306,888 |
|
|
1,337,436 |
|
|
1,175,250 |
|
|
(1.5 |
)% |
|
9.5 |
% |
| Retained earnings |
|
203,704 |
|
|
178,257 |
|
|
134,055 |
|
|
109,942 |
|
|
14.3 |
% |
|
85.3 |
% |
| Other components of
shareholders' equity |
|
40,520 |
|
|
35,910 |
|
|
7,104 |
|
|
(12,994 |
) |
|
12.8 |
% |
|
nm |
|
|
Total shareholders' equity |
|
1,530,935 |
|
|
1,521,055 |
|
|
1,478,595 |
|
|
1,272,198 |
|
|
0.6 |
% |
|
20.3 |
% |
|
Total liabilities and shareholders' equity |
|
$ |
12,097,842 |
|
|
$ |
11,847,374 |
|
|
$ |
11,871,317 |
|
|
$ |
10,514,303 |
|
|
2.1 |
% |
|
15.1 |
% |
| Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares outstanding at end of
period |
|
34,173,357 |
|
|
34,573,643 |
|
|
35,182,772 |
|
|
32,402,757 |
|
|
|
|
|
| Common shareholders' equity
per share (1) |
|
$ |
44.80 |
|
|
$ |
43.99 |
|
|
$ |
42.03 |
|
|
$ |
39.26 |
|
|
|
|
|
| Common shareholders' tangible
equity per share (1) (2) |
|
$ |
34.10 |
|
|
$ |
33.36 |
|
|
$ |
31.45 |
|
|
$ |
31.20 |
|
|
|
|
|
| Common shareholders' tangible
equity to tangible assets (2) |
|
9.93 |
% |
|
10.05 |
% |
|
9.62 |
% |
|
9.86 |
% |
|
|
|
|
| Consolidated Tier 1 leverage
capital ratio |
|
10.70 |
% |
|
10.83 |
% |
|
10.98 |
% |
|
11.04 |
% |
|
|
|
|
| |
|
(1) Calculation is based on number of common shares
outstanding at the end of the period rather than weighted average
shares outstanding. |
| (2) Common
shareholders' tangible equity excludes goodwill and other
intangible assets. Tangible assets exclude goodwill and other
intangible assets. These ratios represent non-GAAP financial
measures. See also Non-GAAP Financial Measures reconciliation
tables on the final two pages of the press release tables. |
| |
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Percentage Change |
| LOANS |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
|
$ |
1,463,303 |
|
|
$ |
1,433,995 |
|
|
$ |
1,430,097 |
|
|
$ |
1,271,363 |
|
|
2.0 |
% |
|
15.1 |
% |
|
Investment properties |
|
2,150,938 |
|
|
2,116,306 |
|
|
2,131,059 |
|
|
1,943,793 |
|
|
1.6 |
% |
|
10.7 |
% |
| Multifamily real estate |
|
399,814 |
|
|
402,241 |
|
|
368,836 |
|
|
309,809 |
|
|
(0.6 |
)% |
|
29.1 |
% |
| Commercial construction |
|
190,532 |
|
|
172,931 |
|
|
172,410 |
|
|
154,071 |
|
|
10.2 |
% |
|
23.7 |
% |
| Multifamily construction |
|
214,878 |
|
|
189,160 |
|
|
184,630 |
|
|
172,433 |
|
|
13.6 |
% |
|
24.6 |
% |
| One- to four-family
construction |
|
488,945 |
|
|
503,061 |
|
|
534,678 |
|
|
498,549 |
|
|
(2.8 |
)% |
|
(1.9 |
)% |
| Land and land
development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
163,829 |
|
|
187,180 |
|
|
188,508 |
|
|
171,610 |
|
|
(12.5 |
)% |
|
(4.5 |
)% |
|
Commercial |
|
26,119 |
|
|
27,470 |
|
|
27,278 |
|
|
22,382 |
|
|
(4.9 |
)% |
|
16.7 |
% |
| Commercial business |
|
1,619,391 |
|
|
1,598,788 |
|
|
1,483,614 |
|
|
1,358,149 |
|
|
1.3 |
% |
|
19.2 |
% |
| Agricultural business
including secured by farmland |
|
390,505 |
|
|
380,805 |
|
|
404,873 |
|
|
359,966 |
|
|
2.5 |
% |
|
8.5 |
% |
| One- to four-family real
estate |
|
947,475 |
|
|
944,617 |
|
|
973,616 |
|
|
849,928 |
|
|
0.3 |
% |
|
11.5 |
% |
| Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer secured by one- to four-family real estate |
|
566,792 |
|
|
575,658 |
|
|
568,979 |
|
|
539,143 |
|
|
(1.5 |
)% |
|
5.1 |
% |
|
Consumer-other |
|
212,847 |
|
|
214,338 |
|
|
216,017 |
|
|
171,323 |
|
|
(0.7 |
)% |
|
24.2 |
% |
|
Total loans receivable |
|
$ |
8,835,368 |
|
|
$ |
8,746,550 |
|
|
$ |
8,684,595 |
|
|
$ |
7,822,519 |
|
|
1.0 |
% |
|
12.9 |
% |
| Restructured loans performing
under their restructured terms |
|
$ |
6,721 |
|
|
$ |
6,594 |
|
|
$ |
13,422 |
|
|
$ |
13,328 |
|
|
|
|
|
| Loans 30 - 89 days past due
and on accrual (1) |
|
$ |
11,496 |
|
|
$ |
17,923 |
|
|
$ |
25,108 |
|
|
$ |
8,688 |
|
|
|
|
|
| Total delinquent loans
(including loans on non-accrual), net (2) |
|
$ |
26,830 |
|
|
$ |
34,479 |
|
|
$ |
38,721 |
|
|
$ |
21,191 |
|
|
|
|
|
| Total delinquent
loans / Total loans receivable |
|
0.30 |
% |
|
0.40 |
% |
|
0.45 |
% |
|
0.27 |
% |
|
|
|
|
| |
| (1)
Includes $112,000 of purchased credit-impaired loans at September
30, 2019 compared to $3,000 at December 31, 2018 and $5,000 at
September 30, 2018. |
| (2)
Delinquent loans include $412,000 of delinquent purchased
credit-impaired loans at September 30, 2019 compared to $519,000 at
December 31, 2018 and $568,000 at September 30, 2018. |
| |
| LOANS BY GEOGRAPHIC
LOCATION |
|
|
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington |
|
$ |
4,313,972 |
|
|
48.8 |
% |
|
$ |
4,293,854 |
|
|
$ |
4,324,588 |
|
|
$ |
3,640,209 |
|
|
0.5 |
% |
|
18.5 |
% |
| Oregon |
|
1,615,192 |
|
|
18.3 |
% |
|
1,628,102 |
|
|
1,636,152 |
|
|
1,628,703 |
|
|
(0.8 |
)% |
|
(0.8 |
)% |
| California |
|
1,729,208 |
|
|
19.5 |
% |
|
1,659,326 |
|
|
1,596,604 |
|
|
1,496,817 |
|
|
4.2 |
% |
|
15.5 |
% |
| Idaho |
|
552,523 |
|
|
6.3 |
% |
|
548,189 |
|
|
521,026 |
|
|
504,297 |
|
|
0.8 |
% |
|
9.6 |
% |
| Utah |
|
62,197 |
|
|
0.7 |
% |
|
62,944 |
|
|
57,318 |
|
|
63,053 |
|
|
(1.2 |
)% |
|
(1.4 |
)% |
| Other |
|
562,276 |
|
|
6.4 |
% |
|
554,135 |
|
|
548,907 |
|
|
489,440 |
|
|
1.5 |
% |
|
14.9 |
% |
| Total loans receivable |
|
$ |
8,835,368 |
|
|
100.0 |
% |
|
$ |
8,746,550 |
|
|
$ |
8,684,595 |
|
|
$ |
7,822,519 |
|
|
1.0 |
% |
|
12.9 |
% |
| |
ADDITIONAL FINANCIAL INFORMATION(dollars in
thousands)
The following table shows loan originations (excluding loans
held for sale) activity for the quarters ending September 30, 2019,
June 30, 2019, and September 30, 2018 and the nine months ending
September 30, 2019 and September 30, 2018 (in thousands):
| LOAN
ORIGINATIONS |
Quarters Ended |
|
Nine Months Ended |
| |
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
| Commercial real estate |
$ |
114,528 |
|
|
$ |
81,361 |
|
|
$ |
142,393 |
|
|
$ |
290,085 |
|
|
$ |
363,899 |
|
| Multifamily real estate |
29,645 |
|
|
21,651 |
|
|
2,215 |
|
|
58,913 |
|
|
9,040 |
|
| Construction and land |
303,151 |
|
|
368,224 |
|
|
370,484 |
|
|
904,869 |
|
|
1,062,834 |
|
| Commercial business |
194,606 |
|
|
241,134 |
|
|
303,472 |
|
|
561,652 |
|
|
632,368 |
|
| Agricultural business |
12,363 |
|
|
20,702 |
|
|
36,747 |
|
|
65,124 |
|
|
104,801 |
|
| One-to four-family
residential |
27,734 |
|
|
26,210 |
|
|
51,459 |
|
|
85,733 |
|
|
95,810 |
|
| Consumer |
101,613 |
|
|
119,970 |
|
|
74,339 |
|
|
285,357 |
|
|
259,161 |
|
| Total loan originations
(excluding loans held for sale) |
$ |
783,640 |
|
|
$ |
879,252 |
|
|
$ |
981,109 |
|
|
$ |
2,251,733 |
|
|
$ |
2,527,913 |
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
Quarters Ended |
|
Nine Months Ended |
| CHANGE IN
THE |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
| ALLOWANCE FOR LOAN
LOSSES |
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
98,254 |
|
|
$ |
97,308 |
|
|
$ |
93,875 |
|
|
$ |
96,485 |
|
|
$ |
89,028 |
|
| Provision for loan losses |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
6,000 |
|
|
6,000 |
|
| Recoveries of loans previously
charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
107 |
|
|
149 |
|
|
12 |
|
|
277 |
|
|
1,580 |
|
|
Construction and land |
|
156 |
|
|
30 |
|
|
5 |
|
|
208 |
|
|
190 |
|
|
One- to four-family real estate |
|
129 |
|
|
230 |
|
|
86 |
|
|
402 |
|
|
732 |
|
|
Commercial business |
|
162 |
|
|
215 |
|
|
586 |
|
|
400 |
|
|
856 |
|
|
Agricultural business, including secured by farmland |
|
2 |
|
|
35 |
|
|
— |
|
|
37 |
|
|
41 |
|
|
Consumer |
|
154 |
|
|
223 |
|
|
46 |
|
|
487 |
|
|
264 |
|
| |
|
710 |
|
|
882 |
|
|
735 |
|
|
1,811 |
|
|
3,663 |
|
| Loans charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
(314 |
) |
|
(393 |
) |
|
(102 |
) |
|
(1,138 |
) |
|
(401 |
) |
|
Construction and land |
|
— |
|
|
— |
|
|
(479 |
) |
|
— |
|
|
(479 |
) |
|
One- to four-family real estate |
|
(86 |
) |
|
— |
|
|
(27 |
) |
|
(86 |
) |
|
(43 |
) |
|
Commercial business |
|
(1,599 |
) |
|
(802 |
) |
|
(473 |
) |
|
(2,991 |
) |
|
(1,367 |
) |
|
Agricultural business, including secured by farmland |
|
(741 |
) |
|
(162 |
) |
|
(5 |
) |
|
(907 |
) |
|
(341 |
) |
|
Consumer |
|
(423 |
) |
|
(579 |
) |
|
(261 |
) |
|
(1,373 |
) |
|
(797 |
) |
| |
|
(3,163 |
) |
|
(1,936 |
) |
|
(1,347 |
) |
|
(6,495 |
) |
|
(3,428 |
) |
|
Net (charge-offs) recoveries |
|
(2,453 |
) |
|
(1,054 |
) |
|
(612 |
) |
|
(4,684 |
) |
|
235 |
|
| Balance, end of period |
|
$ |
97,801 |
|
|
$ |
98,254 |
|
|
$ |
95,263 |
|
|
$ |
97,801 |
|
|
$ |
95,263 |
|
| Net (charge-offs) recoveries /
Average loans receivable |
|
(0.027 |
)% |
|
(0.012 |
)% |
|
(0.008 |
)% |
|
(0.053 |
)% |
|
0.003 |
% |
| ALLOCATION
OF |
|
|
|
|
|
|
|
|
| ALLOWANCE FOR LOAN
LOSSES |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
| Specific or allocated loss
allowance: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
28,515 |
|
|
$ |
26,730 |
|
|
$ |
27,132 |
|
|
$ |
25,147 |
|
|
Multifamily real estate |
|
4,283 |
|
|
4,344 |
|
|
3,818 |
|
|
3,745 |
|
|
Construction and land |
|
22,569 |
|
|
23,554 |
|
|
24,442 |
|
|
24,564 |
|
|
One- to four-family real estate |
|
4,569 |
|
|
4,701 |
|
|
4,714 |
|
|
4,423 |
|
|
Commercial business |
|
21,147 |
|
|
19,557 |
|
|
19,438 |
|
|
17,948 |
|
|
Agricultural business, including secured by farmland |
|
3,895 |
|
|
3,691 |
|
|
3,778 |
|
|
3,505 |
|
|
Consumer |
|
8,441 |
|
|
8,452 |
|
|
7,972 |
|
|
8,110 |
|
|
Total allocated |
|
93,419 |
|
|
91,029 |
|
|
91,294 |
|
|
87,442 |
|
| Unallocated |
|
4,382 |
|
|
7,225 |
|
|
5,191 |
|
|
7,821 |
|
|
Total allowance for loan losses |
|
$ |
97,801 |
|
|
$ |
98,254 |
|
|
$ |
96,485 |
|
|
$ |
95,263 |
|
| Allowance for loan losses /
Total loans receivable |
|
1.11 |
% |
|
1.12 |
% |
|
1.11 |
% |
|
1.22 |
% |
| Allowance for loan losses /
Non-performing loans |
|
536 |
% |
|
534 |
% |
|
616 |
% |
|
603 |
% |
| |
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
| |
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
| NON-PERFORMING
ASSETS |
|
|
|
|
|
|
|
| Loans on non-accrual
status: |
|
|
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
|
|
Commercial |
$ |
5,092 |
|
|
$ |
4,603 |
|
|
$ |
4,088 |
|
|
$ |
3,728 |
|
|
Multifamily |
87 |
|
|
— |
|
|
— |
|
|
— |
|
|
Construction and land |
1,318 |
|
|
2,214 |
|
|
3,188 |
|
|
2,095 |
|
|
One- to four-family |
3,007 |
|
|
2,665 |
|
|
1,544 |
|
|
1,827 |
|
|
Commercial business |
3,035 |
|
|
2,983 |
|
|
2,936 |
|
|
2,921 |
|
|
Agricultural business, including secured by farmland |
757 |
|
|
1,359 |
|
|
1,751 |
|
|
1,645 |
|
|
Consumer |
2,473 |
|
|
3,230 |
|
|
1,241 |
|
|
1,703 |
|
| |
15,769 |
|
|
17,054 |
|
|
14,748 |
|
|
13,919 |
|
| Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
|
|
Commercial |
89 |
|
|
— |
|
|
— |
|
|
428 |
|
|
Construction and land |
1,141 |
|
|
262 |
|
|
— |
|
|
— |
|
|
One- to four-family |
652 |
|
|
995 |
|
|
658 |
|
|
1,076 |
|
|
Commercial business |
358 |
|
|
1 |
|
|
1 |
|
|
87 |
|
|
Consumer |
247 |
|
|
97 |
|
|
247 |
|
|
296 |
|
| |
2,487 |
|
|
1,355 |
|
|
906 |
|
|
1,887 |
|
| Total non-performing
loans |
18,256 |
|
|
18,409 |
|
|
15,654 |
|
|
15,806 |
|
| Real estate owned (REO) |
228 |
|
|
2,513 |
|
|
2,611 |
|
|
364 |
|
| Other repossessed assets |
115 |
|
|
112 |
|
|
592 |
|
|
573 |
|
|
Total non-performing assets |
$ |
18,599 |
|
|
$ |
21,034 |
|
|
$ |
18,857 |
|
|
$ |
16,743 |
|
| Total non-performing
assets to total assets |
0.15 |
% |
|
0.18 |
% |
|
0.16 |
% |
|
0.16 |
% |
| Purchased credit-impaired
loans, net |
$ |
12,575 |
|
|
$ |
12,945 |
|
|
$ |
14,413 |
|
|
$ |
12,944 |
|
| |
|
|
|
| |
Quarters Ended |
|
Nine Months Ended |
| REAL ESTATE
OWNED |
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
|
Balance, beginning of period |
$ |
2,513 |
|
|
$ |
2,611 |
|
|
$ |
473 |
|
|
$ |
2,611 |
|
|
$ |
360 |
|
|
Additions from loan foreclosures |
48 |
|
|
61 |
|
|
— |
|
|
109 |
|
|
502 |
|
|
Proceeds from dispositions of REO |
(2,333 |
) |
|
(150 |
) |
|
(90 |
) |
|
(2,483 |
) |
|
(385 |
) |
|
(Loss) gain on sale of REO |
— |
|
|
(9 |
) |
|
8 |
|
|
(9 |
) |
|
74 |
|
|
Valuation adjustments in the period |
— |
|
|
— |
|
|
(27 |
) |
|
— |
|
|
(187 |
) |
| Balance, end of period |
$ |
228 |
|
|
$ |
2,513 |
|
|
$ |
364 |
|
|
$ |
228 |
|
|
$ |
364 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,885,210 |
|
|
$ |
3,671,995 |
|
|
$ |
3,657,817 |
|
|
$ |
3,469,294 |
|
|
5.8 |
% |
|
12.0 |
% |
| Interest-bearing checking |
|
1,209,826 |
|
|
1,187,035 |
|
|
1,191,016 |
|
|
1,034,678 |
|
|
1.9 |
% |
|
16.9 |
% |
| Regular savings accounts |
|
1,863,839 |
|
|
1,848,048 |
|
|
1,842,581 |
|
|
1,627,560 |
|
|
0.9 |
% |
|
14.5 |
% |
| Money market accounts |
|
1,551,305 |
|
|
1,511,119 |
|
|
1,465,369 |
|
|
1,373,618 |
|
|
2.7 |
% |
|
12.9 |
% |
|
Total interest-bearing transaction and savings accounts |
|
4,624,970 |
|
|
4,546,202 |
|
|
4,498,966 |
|
|
4,035,856 |
|
|
1.7 |
% |
|
14.6 |
% |
|
Total core deposits |
|
8,510,180 |
|
|
8,218,197 |
|
|
8,156,783 |
|
|
7,505,150 |
|
|
3.6 |
% |
|
13.4 |
% |
| Interest-bearing
certificates |
|
1,218,591 |
|
|
1,070,770 |
|
|
1,320,265 |
|
|
1,180,674 |
|
|
13.8 |
% |
|
3.2 |
% |
|
Total deposits |
|
$ |
9,728,771 |
|
|
$ |
9,288,967 |
|
|
$ |
9,477,048 |
|
|
$ |
8,685,824 |
|
|
4.7 |
% |
|
12.0 |
% |
| GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
|
Washington |
|
$ |
5,833,547 |
|
|
60.0 |
% |
|
$ |
5,503,280 |
|
|
$ |
5,674,328 |
|
|
$ |
4,849,807 |
|
|
6.0 |
% |
|
20.3 |
% |
| Oregon |
|
1,990,155 |
|
|
20.4 |
% |
|
1,919,051 |
|
|
1,891,145 |
|
|
1,916,183 |
|
|
3.7 |
% |
|
3.9 |
% |
| California |
|
1,429,939 |
|
|
14.7 |
% |
|
1,399,137 |
|
|
1,434,033 |
|
|
1,462,417 |
|
|
2.2 |
% |
|
(2.2 |
)% |
| Idaho |
|
475,130 |
|
|
4.9 |
% |
|
467,499 |
|
|
477,542 |
|
|
457,417 |
|
|
1.6 |
% |
|
3.9 |
% |
| Total deposits |
|
$ |
9,728,771 |
|
|
100.0 |
% |
|
$ |
9,288,967 |
|
|
$ |
9,477,048 |
|
|
$ |
8,685,824 |
|
|
4.7 |
% |
|
12.0 |
% |
| INCLUDED IN TOTAL
DEPOSITS |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Public non-interest-bearing accounts |
|
$ |
114,879 |
|
|
$ |
102,348 |
|
|
$ |
96,009 |
|
|
$ |
76,957 |
|
| Public interest-bearing
transaction & savings accounts |
|
119,729 |
|
|
121,262 |
|
|
121,392 |
|
|
110,802 |
|
| Public interest-bearing
certificates |
|
26,609 |
|
|
28,656 |
|
|
30,089 |
|
|
25,367 |
|
|
Total public deposits |
|
$ |
261,217 |
|
|
$ |
252,266 |
|
|
$ |
247,490 |
|
|
$ |
213,126 |
|
| Total brokered deposits |
|
$ |
299,496 |
|
|
$ |
138,395 |
|
|
$ |
377,347 |
|
|
$ |
325,154 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Actual |
|
Minimum to be categorized as "Adequately
Capitalized" |
|
Minimum to becategorized
as"Well Capitalized" |
| REGULATORY CAPITAL
RATIOS AS OF SEPTEMBER 30, 2019 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk-weighted assets |
|
$ |
1,337,087 |
|
|
13.20 |
% |
|
$ |
810,546 |
|
|
8.00 |
% |
|
$ |
1,013,183 |
|
|
10.00 |
% |
|
Tier 1 capital to risk-weighted assets |
|
1,236,687 |
|
|
12.21 |
% |
|
607,910 |
|
|
6.00 |
% |
|
607,910 |
|
|
6.00 |
% |
|
Tier 1 leverage capital to average assets |
|
1,236,687 |
|
|
10.70 |
% |
|
462,227 |
|
|
4.00 |
% |
|
n/a |
|
|
n/a |
|
|
Common equity tier 1 capital to risk-weighted assets |
|
1,100,687 |
|
|
10.86 |
% |
|
455,932 |
|
|
4.50 |
% |
|
n/a |
|
|
n/a |
|
| Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk-weighted assets |
|
1,248,269 |
|
|
12.56 |
% |
|
795,040 |
|
|
8.00 |
% |
|
993,800 |
|
|
10.00 |
% |
|
Tier 1 capital to risk-weighted assets |
|
1,150,328 |
|
|
11.58 |
% |
|
596,280 |
|
|
6.00 |
% |
|
795,040 |
|
|
8.00 |
% |
|
Tier 1 leverage capital to average assets |
|
1,150,328 |
|
|
10.21 |
% |
|
450,496 |
|
|
4.00 |
% |
|
563,120 |
|
|
5.00 |
% |
|
Common equity tier 1 capital to risk-weighted assets |
|
1,150,328 |
|
|
11.58 |
% |
|
447,210 |
|
|
4.50 |
% |
|
645,970 |
|
|
6.50 |
% |
| Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk-weighted assets |
|
36,470 |
|
|
18.97 |
% |
|
15,379 |
|
|
8.00 |
% |
|
19,223 |
|
|
10.00 |
% |
|
Tier 1 capital to risk-weighted assets |
|
34,066 |
|
|
17.72 |
% |
|
11,534 |
|
|
6.00 |
% |
|
15,379 |
|
|
8.00 |
% |
|
Tier 1 leverage capital to average assets |
|
34,066 |
|
|
11.68 |
% |
|
11,662 |
|
|
4.00 |
% |
|
14,577 |
|
|
5.00 |
% |
|
Common equity tier 1 capital to risk-weighted assets |
|
34,066 |
|
|
17.72 |
% |
|
8,651 |
|
|
4.50 |
% |
|
12,495 |
|
|
6.50 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
| (rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
| |
September 30, 2019 |
|
June 30, 2019 |
|
September 30, 2018 |
| |
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Held for sale loans |
$ |
154,529 |
|
$ |
1,607 |
|
4.13 |
% |
|
$ |
47,663 |
|
$ |
567 |
|
4.77 |
% |
|
$ |
72,249 |
|
$ |
895 |
|
4.91 |
% |
|
Mortgage loans |
6,872,426 |
|
89,948 |
|
5.19 |
% |
|
6,800,802 |
|
89,682 |
|
5.29 |
% |
|
6,117,299 |
|
81,130 |
|
5.26 |
% |
|
Commercial/agricultural loans |
1,809,397 |
|
23,750 |
|
5.21 |
% |
|
1,769,603 |
|
23,924 |
|
5.42 |
% |
|
1,511,077 |
|
20,545 |
|
5.39 |
% |
|
Consumer and other loans |
173,342 |
|
2,791 |
|
6.39 |
% |
|
179,693 |
|
2,834 |
|
6.33 |
% |
|
141,503 |
|
2,298 |
|
6.44 |
% |
|
Total loans(1) |
9,009,694 |
|
118,096 |
|
5.20 |
% |
|
8,797,761 |
|
117,007 |
|
5.33 |
% |
|
7,842,128 |
|
104,868 |
|
5.31 |
% |
|
Mortgage-backed securities |
1,358,448 |
|
9,415 |
|
2.75 |
% |
|
1,354,048 |
|
9,794 |
|
2.90 |
% |
|
1,266,862 |
|
8,915 |
|
2.79 |
% |
|
Other securities |
414,994 |
|
3,058 |
|
2.92 |
% |
|
448,721 |
|
3,310 |
|
2.96 |
% |
|
462,048 |
|
3,279 |
|
2.82 |
% |
|
Interest-bearing deposits with banks |
82,836 |
|
489 |
|
2.34 |
% |
|
53,955 |
|
340 |
|
2.53 |
% |
|
65,191 |
|
332 |
|
2.02 |
% |
|
FHLB stock |
29,400 |
|
378 |
|
5.10 |
% |
|
30,902 |
|
387 |
|
5.02 |
% |
|
20,345 |
|
254 |
|
4.95 |
% |
|
Total investment securities |
1,885,678 |
|
13,340 |
|
2.81 |
% |
|
1,887,626 |
|
13,831 |
|
2.94 |
% |
|
1,814,446 |
|
12,780 |
|
2.79 |
% |
|
Total interest-earning assets |
10,895,372 |
|
131,436 |
|
4.79 |
% |
|
10,685,387 |
|
130,838 |
|
4.91 |
% |
|
9,656,574 |
|
117,648 |
|
4.83 |
% |
| Non-interest-earning
assets |
1,078,621 |
|
|
|
|
1,048,811 |
|
|
|
|
799,083 |
|
|
|
|
Total assets |
$ |
11,973,993 |
|
|
|
|
$ |
11,734,198 |
|
|
|
|
$ |
10,455,657 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,194,633 |
|
621 |
|
0.21 |
% |
|
$ |
1,177,534 |
|
564 |
|
0.19 |
% |
|
$ |
1,006,010 |
|
270 |
|
0.11 |
% |
|
Savings accounts |
1,854,967 |
|
2,244 |
|
0.48 |
% |
|
1,851,913 |
|
2,119 |
|
0.46 |
% |
|
1,631,158 |
|
1,002 |
|
0.24 |
% |
|
Money market accounts |
1,542,264 |
|
2,944 |
|
0.76 |
% |
|
1,497,717 |
|
2,656 |
|
0.71 |
% |
|
1,381,943 |
|
1,011 |
|
0.29 |
% |
|
Certificates of deposit |
1,155,710 |
|
4,205 |
|
1.44 |
% |
|
1,105,844 |
|
3,684 |
|
1.34 |
% |
|
1,153,403 |
|
3,234 |
|
1.11 |
% |
|
Total interest-bearing deposits |
5,747,574 |
|
10,014 |
|
0.69 |
% |
|
5,633,008 |
|
9,023 |
|
0.64 |
% |
|
5,172,514 |
|
5,517 |
|
0.42 |
% |
|
Non-interest-bearing deposits |
3,786,143 |
|
— |
|
— |
% |
|
3,652,096 |
|
— |
|
— |
% |
|
3,424,587 |
|
— |
|
— |
% |
|
Total deposits |
9,533,717 |
|
10,014 |
|
0.42 |
% |
|
9,285,104 |
|
9,023 |
|
0.39 |
% |
|
8,597,101 |
|
5,517 |
|
0.25 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
476,435 |
|
3,107 |
|
2.59 |
% |
|
514,703 |
|
3,370 |
|
2.63 |
% |
|
249,896 |
|
1,388 |
|
2.20 |
% |
|
Other borrowings |
122,035 |
|
82 |
|
0.27 |
% |
|
122,455 |
|
67 |
|
0.22 |
% |
|
110,868 |
|
60 |
|
0.21 |
% |
|
Junior subordinated debentures |
140,212 |
|
1,612 |
|
4.56 |
% |
|
140,212 |
|
1,683 |
|
4.81 |
% |
|
140,212 |
|
1,605 |
|
4.54 |
% |
|
Total borrowings |
738,682 |
|
4,801 |
|
2.58 |
% |
|
777,370 |
|
5,120 |
|
2.64 |
% |
|
500,976 |
|
3,053 |
|
2.42 |
% |
|
Total funding liabilities |
10,272,399 |
|
14,815 |
|
0.57 |
% |
|
10,062,474 |
|
14,143 |
|
0.56 |
% |
|
9,098,077 |
|
8,570 |
|
0.37 |
% |
| Other non-interest-bearing
liabilities(2) |
163,809 |
|
|
|
|
151,436 |
|
|
|
|
85,485 |
|
|
|
|
Total liabilities |
10,436,208 |
|
|
|
|
10,213,910 |
|
|
|
|
9,183,562 |
|
|
|
| Shareholders' equity |
1,537,785 |
|
|
|
|
1,520,288 |
|
|
|
|
1,272,095 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
11,973,993 |
|
|
|
|
$ |
11,734,198 |
|
|
|
|
$ |
10,455,657 |
|
|
|
| Net interest income/rate
spread |
|
$ |
116,621 |
|
4.22 |
% |
|
|
$ |
116,695 |
|
4.35 |
% |
|
|
$ |
109,078 |
|
4.46 |
% |
| Net interest margin |
|
|
4.25 |
% |
|
|
|
4.38 |
% |
|
|
|
4.48 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
|
1.31 |
% |
|
|
|
1.36 |
% |
|
|
|
1.43 |
% |
| Return on average equity |
|
|
10.21 |
% |
|
|
|
10.47 |
% |
|
|
|
11.78 |
% |
| Average equity/average
assets |
|
|
12.84 |
% |
|
|
|
12.96 |
% |
|
|
|
12.17 |
% |
| Average interest-earning
assets/average interest-bearing liabilities |
|
|
167.98 |
% |
|
|
|
166.69 |
% |
|
|
|
170.21 |
% |
| Average interest-earning
assets/average funding liabilities |
|
|
106.06 |
% |
|
|
|
106.19 |
% |
|
|
|
106.14 |
% |
| Non-interest income/average
assets |
|
|
0.69 |
% |
|
|
|
0.78 |
% |
|
|
|
0.77 |
% |
| Non-interest expense/average
assets |
|
|
2.89 |
% |
|
|
|
2.96 |
% |
|
|
|
3.10 |
% |
| Efficiency ratio(4) |
|
|
63.50 |
% |
|
|
|
62.22 |
% |
|
|
|
63.04 |
% |
| Adjusted efficiency
ratio(5) |
|
|
60.71 |
% |
|
|
|
59.56 |
% |
|
|
|
60.21 |
% |
| |
| (1) Average
balances include loans accounted for on a nonaccrual basis and
loans 90 days or more past due. Amortization of net deferred
loan fees/costs is included with interest on loans. |
| (2) Average
other non-interest-bearing liabilities include fair value
adjustments related to junior subordinated debentures. |
| (3) Yields
and costs have not been adjusted for the effect of tax-exempt
interest. |
|
(4) Non-interest expense divided by the total of net interest
income (before provision for loan losses) and non-interest
income. |
| (5) Adjusted
non-interest expense divided by adjusted revenue. Adjusted
revenue excludes net gain (loss) on sale of securities and fair
value adjustments. Adjusted non-interest expense excludes
acquisition-related expenses, amortization of core deposit
intangibles (CDI), REO gain (loss), and state/municipal business
and use taxes. These represent non-GAAP financial
measures. See also Non-GAAP Financial Measures reconciliation
tables on the last two pages of this press release. |
| |
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
| (rates / ratios
annualized) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Nine Months Ended |
| |
September 30, 2019 |
|
September 30, 2018 |
| |
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
| Interest-earning assets: |
|
|
|
|
|
|
|
|
Held for sale loans |
$ |
100,273 |
|
$ |
3,295 |
|
4.39 |
% |
|
$ |
81,244 |
|
$ |
2,871 |
|
4.72 |
% |
|
Mortgage loans |
6,835,861 |
|
268,232 |
|
5.25 |
% |
|
6,058,535 |
|
231,703 |
|
5.11 |
% |
|
Commercial/agricultural loans |
1,761,222 |
|
70,486 |
|
5.35 |
% |
|
1,482,377 |
|
57,348 |
|
5.17 |
% |
|
Consumer and other loans |
178,792 |
|
8,545 |
|
6.39 |
% |
|
141,180 |
|
6,821 |
|
6.46 |
% |
|
Total loans(1) |
8,876,148 |
|
350,558 |
|
5.28 |
% |
|
7,763,336 |
|
298,743 |
|
5.14 |
% |
|
Mortgage-backed securities |
1,368,081 |
|
29,716 |
|
2.90 |
% |
|
1,196,282 |
|
25,145 |
|
2.81 |
% |
|
Other securities |
449,030 |
|
9,847 |
|
2.93 |
% |
|
466,313 |
|
9,699 |
|
2.78 |
% |
|
Interest-bearing deposits with banks |
60,655 |
|
1,118 |
|
2.46 |
% |
|
60,532 |
|
775 |
|
1.71 |
% |
|
FHLB stock |
30,679 |
|
1,031 |
|
4.49 |
% |
|
19,722 |
|
529 |
|
3.59 |
% |
|
Total investment securities |
1,908,445 |
|
41,712 |
|
2.92 |
% |
|
1,742,849 |
|
36,148 |
|
2.77 |
% |
|
Total interest-earning assets |
10,784,593 |
|
392,270 |
|
4.86 |
% |
|
9,506,185 |
|
334,891 |
|
4.71 |
% |
| Non-interest-earning
assets |
1,053,180 |
|
|
|
|
802,915 |
|
|
|
|
Total assets |
$ |
11,837,773 |
|
|
|
|
$ |
10,309,100 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,175,521 |
|
1,660 |
|
0.19 |
% |
|
$ |
1,020,457 |
|
797 |
|
0.10 |
% |
|
Savings accounts |
1,853,671 |
|
6,283 |
|
0.45 |
% |
|
1,627,297 |
|
2,440 |
|
0.20 |
% |
|
Money market accounts |
1,510,293 |
|
7,851 |
|
0.70 |
% |
|
1,414,513 |
|
2,469 |
|
0.23 |
% |
|
Certificates of deposit |
1,171,363 |
|
11,886 |
|
1.36 |
% |
|
1,073,861 |
|
7,433 |
|
0.93 |
% |
|
Total interest-bearing deposits |
5,710,848 |
|
27,680 |
|
0.65 |
% |
|
5,136,128 |
|
13,139 |
|
0.34 |
% |
|
Non-interest-bearing deposits |
3,682,047 |
|
— |
|
— |
% |
|
3,344,312 |
|
— |
|
— |
% |
|
Total deposits |
9,392,895 |
|
27,680 |
|
0.39 |
% |
|
8,480,440 |
|
13,139 |
|
0.21 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
FHLB advances |
508,247 |
|
9,953 |
|
2.62 |
% |
|
234,323 |
|
3,564 |
|
2.03 |
% |
|
Other borrowings |
120,847 |
|
209 |
|
0.23 |
% |
|
105,700 |
|
179 |
|
0.23 |
% |
|
Junior subordinated debentures |
140,212 |
|
5,008 |
|
4.78 |
% |
|
140,212 |
|
4,495 |
|
4.29 |
% |
|
Total borrowings |
769,306 |
|
15,170 |
|
2.64 |
% |
|
480,235 |
|
8,238 |
|
2.29 |
% |
|
Total funding liabilities |
10,162,201 |
|
42,850 |
|
0.56 |
% |
|
8,960,675 |
|
21,377 |
|
0.32 |
% |
| Other non-interest-bearing
liabilities(2) |
155,771 |
|
|
|
|
75,821 |
|
|
|
|
Total liabilities |
10,317,972 |
|
|
|
|
9,036,496 |
|
|
|
| Shareholders' equity |
1,519,801 |
|
|
|
|
1,272,604 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
11,837,773 |
|
|
|
|
$ |
10,309,100 |
|
|
|
| Net interest income/rate
spread |
|
$ |
349,420 |
|
4.30 |
% |
|
|
$ |
313,514 |
|
4.39 |
% |
| Net interest margin |
|
|
4.33 |
% |
|
|
|
4.41 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
| Return on average assets |
|
|
1.27 |
% |
|
|
|
1.28 |
% |
| Return on average equity |
|
|
9.91 |
% |
|
|
|
10.40 |
% |
| Average equity/average
assets |
|
|
12.84 |
% |
|
|
|
12.34 |
% |
| Average interest-earning
assets/average interest-bearing liabilities |
|
|
166.42 |
% |
|
|
|
169.26 |
% |
| Average interest-earning
assets/average funding liabilities |
|
|
106.12 |
% |
|
|
|
106.09 |
% |
| Non-interest income/average
assets |
|
|
0.70 |
% |
|
|
|
0.82 |
% |
| Non-interest expense/average
assets |
|
|
2.98 |
% |
|
|
|
3.19 |
% |
| Efficiency ratio(4) |
|
|
64.23 |
% |
|
|
|
65.33 |
% |
| Adjusted efficiency
ratio(5) |
|
|
61.17 |
% |
|
|
|
63.79 |
% |
| |
| (1) Average
balances include loans accounted for on a nonaccrual basis and
loans 90 days or more past due. Amortization of net deferred
loan fees/costs is included with interest on loans. |
| (2) Average
other non-interest-bearing liabilities include fair value
adjustments related to junior subordinated debentures. |
| (3) Yields
and costs have not been adjusted for the effect of tax-exempt
interest. |
| (4)
Non-interest expense divided by the total of net interest income
(before provision for loan losses) and non-interest
income. |
| (5) Adjusted
non-interest expense divided by adjusted revenue. Adjusted
revenue excludes net gain (loss) on sale of securities and fair
value adjustments. Adjusted non-interest expense excludes
acquisition-related expenses, amortization of CDI, REO gain (loss),
and state/municipal business and use taxes. These represent
non-GAAP financial measures. See also Non-GAAP Financial
Measures reconciliation tables on the last two pages of this press
release. |
| |
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| * Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
In addition to results presented in accordance with generally
accepted accounting principles in the United States of America
(GAAP), this press release contains certain non-GAAP financial
measures. Management has presented these non-GAAP financial
measures in this earnings release because it believes that they
provide useful and comparative information to assess trends in
Banner's core operations reflected in the current quarter's results
and facilitate the comparison of our performance with the
performance of our peers. However, these non-GAAP financial
measures are supplemental and are not a substitute for any analysis
based on GAAP. Where applicable, comparable earnings
information using GAAP financial measures is also presented.
Because not all companies use the same calculations, our
presentation may not be comparable to other similarly titled
measures as calculated by other companies. For a reconciliation of
these non-GAAP financial measures, see the tables below: |
| |
|
|
|
|
|
|
|
|
|
| ADJUSTED
REVENUE |
Quarters Ended |
|
Nine Months Ended |
| |
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
|
Net interest income before provision for loan losses |
$ |
116,621 |
|
|
$ |
116,695 |
|
|
$ |
109,078 |
|
|
$ |
349,420 |
|
|
$ |
313,514 |
|
| Total non-interest income |
20,866 |
|
|
22,676 |
|
|
20,411 |
|
|
61,667 |
|
|
62,990 |
|
| Total GAAP revenue |
137,487 |
|
|
139,371 |
|
|
129,489 |
|
|
411,087 |
|
|
376,504 |
|
|
Exclude net loss (gain) on sale of securities |
2 |
|
|
28 |
|
|
— |
|
|
29 |
|
|
(48 |
) |
|
Exclude net change in valuation of financial instruments carried at
fair value |
69 |
|
|
114 |
|
|
(45 |
) |
|
172 |
|
|
(3,577 |
) |
| Adjusted revenue
(non-GAAP) |
$ |
137,558 |
|
|
$ |
139,513 |
|
|
$ |
129,444 |
|
|
$ |
411,288 |
|
|
$ |
372,879 |
|
| |
|
|
|
|
| ADJUSTED
EARNINGS |
|
Quarters Ended |
|
Nine Months Ended |
| |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
|
Net income (GAAP) |
|
$ |
39,577 |
|
|
$ |
39,700 |
|
|
$ |
37,773 |
|
|
$ |
112,623 |
|
|
$ |
98,987 |
|
|
Exclude net loss (gain) on sale of securities |
|
2 |
|
|
28 |
|
|
— |
|
|
29 |
|
|
(48 |
) |
|
Exclude net change in valuation of financial instruments carried at
fair value |
|
69 |
|
|
114 |
|
|
(45 |
) |
|
172 |
|
|
(3,577 |
) |
|
Exclude acquisition-related expenses |
|
676 |
|
|
301 |
|
|
1,005 |
|
|
3,125 |
|
|
1,005 |
|
|
Exclude related tax (benefit) expense |
|
(179 |
) |
|
(106 |
) |
|
(126 |
) |
|
(798 |
) |
|
733 |
|
| Total adjusted earnings
(non-GAAP) |
|
$ |
40,145 |
|
|
$ |
40,037 |
|
|
$ |
38,607 |
|
|
$ |
115,151 |
|
|
$ |
97,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share
(GAAP) |
|
$ |
1.15 |
|
|
$ |
1.14 |
|
|
$ |
1.17 |
|
|
$ |
3.23 |
|
|
$ |
3.05 |
|
| Diluted adjusted earnings per
share (non-GAAP) |
|
$ |
1.16 |
|
|
$ |
1.15 |
|
|
$ |
1.19 |
|
|
$ |
3.30 |
|
|
$ |
3.00 |
|
| |
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| ADJUSTED EFFICIENCY
RATIO |
|
Quarters Ended |
|
Nine Months Ended |
| |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Sep 30, 2018 |
|
Sep 30, 2019 |
|
Sep 30, 2018 |
|
Non-interest expense (GAAP) |
|
$ |
87,308 |
|
|
$ |
86,716 |
|
|
$ |
81,632 |
|
|
$ |
264,038 |
|
|
$ |
245,975 |
|
|
Exclude acquisition-related expenses |
|
(676 |
) |
|
(301 |
) |
|
(1,005 |
) |
|
(3,125 |
) |
|
(1,005 |
) |
|
Exclude CDI amortization |
|
(1,985 |
) |
|
(2,053 |
) |
|
(1,348 |
) |
|
(6,090 |
) |
|
(4,112 |
) |
|
Exclude state/municipal tax expense |
|
(1,011 |
) |
|
(1,007 |
) |
|
(902 |
) |
|
(2,963 |
) |
|
(2,430 |
) |
|
Exclude REO (loss) gain |
|
(126 |
) |
|
(260 |
) |
|
(433 |
) |
|
(263 |
) |
|
(553 |
) |
| Adjusted non-interest expense
(non-GAAP) |
|
$ |
83,510 |
|
|
$ |
83,095 |
|
|
$ |
77,944 |
|
|
$ |
251,597 |
|
|
$ |
237,875 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Net interest income before
provision for loan losses (GAAP) |
|
$ |
116,621 |
|
|
$ |
116,695 |
|
|
$ |
109,078 |
|
|
$ |
349,420 |
|
|
$ |
313,514 |
|
| Non-interest income
(GAAP) |
|
20,866 |
|
|
22,676 |
|
|
20,411 |
|
|
61,667 |
|
|
62,990 |
|
| Total revenue |
|
137,487 |
|
|
139,371 |
|
|
129,489 |
|
|
411,087 |
|
|
376,504 |
|
|
Exclude net loss (gain) on sale of securities |
|
2 |
|
|
28 |
|
|
— |
|
|
29 |
|
|
(48 |
) |
|
Exclude net change in valuation of financial instruments carried at
fair value |
|
69 |
|
|
114 |
|
|
(45 |
) |
|
172 |
|
|
(3,577 |
) |
| Adjusted revenue
(non-GAAP) |
|
$ |
137,558 |
|
|
$ |
139,513 |
|
|
$ |
129,444 |
|
|
$ |
411,288 |
|
|
$ |
372,879 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio (GAAP) |
|
63.50 |
% |
|
62.22 |
% |
|
63.04 |
% |
|
64.23 |
% |
|
65.33 |
% |
| Adjusted efficiency ratio
(non-GAAP) |
|
60.71 |
% |
|
59.56 |
% |
|
60.21 |
% |
|
61.17 |
% |
|
63.79 |
% |
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
|
Sep 30, 2019 |
|
Jun 30, 2019 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Shareholders' equity (GAAP) |
|
$ |
1,530,935 |
|
|
$ |
1,521,055 |
|
|
$ |
1,478,595 |
|
|
$ |
1,272,198 |
|
|
Exclude goodwill and other intangible assets, net |
|
365,764 |
|
|
367,749 |
|
|
372,078 |
|
|
261,158 |
|
| Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,165,171 |
|
|
$ |
1,153,306 |
|
|
$ |
1,106,517 |
|
|
$ |
1,011,040 |
|
| |
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
$ |
12,097,842 |
|
|
$ |
11,847,374 |
|
|
$ |
11,871,317 |
|
|
$ |
10,514,303 |
|
|
Exclude goodwill and other intangible assets, net |
|
365,764 |
|
|
367,749 |
|
|
372,078 |
|
|
261,158 |
|
| Total tangible assets
(non-GAAP) |
|
$ |
11,732,078 |
|
|
$ |
11,479,625 |
|
|
$ |
11,499,239 |
|
|
$ |
10,253,145 |
|
| Common shareholders' equity to
total assets (GAAP) |
|
12.65 |
% |
|
12.84 |
% |
|
12.46 |
% |
|
12.10 |
% |
| Tangible common shareholders'
equity to tangible assets (non-GAAP) |
|
9.93 |
% |
|
10.05 |
% |
|
9.62 |
% |
|
9.86 |
% |
| |
|
|
|
|
|
|
|
|
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
|
|
| Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,165,171 |
|
|
$ |
1,153,306 |
|
|
$ |
1,106,517 |
|
|
$ |
1,011,040 |
|
| Common shares outstanding at
end of period |
|
34,173,357 |
|
|
34,573,643 |
|
|
35,182,772 |
|
|
32,402,757 |
|
| Common shareholders' equity
(book value) per share (GAAP) |
|
$ |
44.80 |
|
|
$ |
43.99 |
|
|
$ |
42.03 |
|
|
$ |
39.26 |
|
| Tangible common shareholders'
equity (tangible book value) per share (non-GAAP) |
|
$ |
34.10 |
|
|
$ |
33.36 |
|
|
$ |
31.45 |
|
|
$ |
31.20 |
|
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